All firm news and articles of Brewer, Krause, Brooks & Chastain.

A Surviving Spouse’s Right to Action

When an individual dies as a result of the wrongful acts of another, there is often a question as to who gets to bring an action against the tortfeasor.  Is it the surviving spouse or is it the surviving children?

In Tennessee, the law provides the deceased’s right of action passes to that person’s surviving spouse and, in the case of no surviving spouse, to the person’s children or next of kin.  Tenn. Code Ann. § 20-5-106.  In other words, the surviving spouse has the superior right to bring a wrongful death action; the children may only bring an action if there is either no surviving spouse or the surviving spouse has waived his or her right to the action.  See Foster v. Jeffers, 813 S.W.2d 449, 451 (Tenn. Ct. App. 1991).  As the Tennessee Supreme Court has explained:

Because multiple actions may not be brought to resolve a single wrongful death claim, the statutes carefully prescribe the priority of those who may assert the action on behalf of the decedent and any other beneficiaries.  In a dispute between the surviving spouse and the children of the decedent as to who may maintain the action, the surviving spouse clearly has “the prior and superior right above all others….”  Foster v. Jeffers, 813 S.W.2d 449, 451 (Tenn. Ct. App. 1991); see also Tenn.Code Ann. § 20–5–107 (1994); Busby v. Massey, 686 S.W.2d 60, 62 (Tenn. 1984).  In fact, the children of the deceased may maintain an action only if the decedent is not survived by a spouse or if the surviving spouse has waived his or her right of priority. See Tenn.Code Ann. § 20–5–107; Foster, 813 S.W.2d at 453. Consequently, once the surviving spouse has asserted his or her right or priority, the statutes give to the surviving spouse complete “control over the right of action until he or she waives that right.”  Estate of Baker ex rel. Baker v. Maples, 995 S.W.2d 114, 115 (Tenn. Ct. App. 1999).

Kline v. Eyrich, 69 S.W.3d 197, 206 (Tenn. 2002); see also Spires v. Simpson, 2016 WL 1697832, at *5 (Tenn. Ct. App., Apr. 26, 2016).

With that being said, there are several avenues under which a surviving spouse may be deemed to have waived his or her right of priority.  For instance, the children of the deceased may establish the spouse abandoned the deceased or otherwise was fully withdrawn from the deceased for a period of two years.  If such is shown, the right of priority will be waived.  See Tenn. Code Ann. § 20-5-106.  The spouse may also waive his or her right by inaction, see Foster, 813 S.W.2d at 453 , or by permitting a child’s suit to stand without objection, Koontz v. Fleming, 65 S.W.2d 821, 824 (Tenn Ct. App. 1933).

In sum, a surviving spouse has the superior right to bring an action against the deceased’s tortfeasor unless he or she is deemed to have waived such right, in which case the deceased’s surviving children attain the superior right.


The question often comes up as to whether a public adjuster hired by the insured should be listed on payments made under the policy for the insured’s claim.  Many public adjusters provide insurance companies with an assignment signed by the insured requesting the public adjuster or public adjusting firm be named on any loss payments made under the policy.

In 2006, the Tennessee legislature enacted a statute concerning public adjusters in general.  The statute describes the public adjuster’s duties as well as the requirements of any public adjuster contract.  The statute provides the following important provisions for consideration as to whether inclusion of the public adjuster and the payment is appropriate:

  • A public adjuster shall ensure that all contracts for the public adjuster’s services are in writing and set forth all material terms and conditions of the engagement.
  • Any compensation or anything of value in connection with an insured’s specific loss that will be received by a public adjuster shall be disclosed by the public adjuster to the insured in writing, including the source and amount of the compensation.
  • Nothing in this part shall prevent a public adjuster from requesting an insured to request the insurer to include the public adjuster’s name as a payee on any check.

Tenn. Code Ann. §§ 56-6-914 & 917.

An assignee of claim proceeds has no right to recover proceeds beyond that which the named insured had.  See, e.g., Zaharias v. Vassis, 789 S.W.2d 906, 910 (Tenn. Ct. App. 1989).  An assignment of policy proceeds is distinguished from an assignment of the policy itself.  See, e.g., Metropolitan Life Insurance Co. v. Brown, 160 S.W.2d 434, 437-38 (Tenn. Ct. App. 1941).  Tennessee courts hold that an assignment of proceeds made after a loss, as distinguished from an assignment made prior to the loss date, was valid despite the lack of consent by the insurer since the liability of the insurer was fixed at the time of the loss.

Based upon the statute, if the insured is required to assign rights to the public adjusting firm under the specific terms of the contract, the statute makes it clear that that provision is not valid.  However, the statute also contains a provision that allows a public adjuster to “request” an insured to ask the insurance company to include the public adjuster on any loss payments.  What we know is that if the “assignment” is made part of the actual public adjuster contract itself, it is not valid.  However, if the assignment comes in the form of some other independent document, the question is whether such would fall into the category of a “request” by the insured.  So far, there are no Tennessee cases on this issue.  For this reason, this is likely a consideration that should be made on a case by case basis.

However, what about situations when a first party loss is also payable to a mortgagee?  In most residential and commercial property policies, the mortgagee has a right to be paid along with the insured as interests appear.  If the insurer were to additionally include the public adjuster as a payee along with the mortgagee and the insured, this would directly affect the mortgagee’s rights under the policy.  For this reason, when the policy lists a mortgagee and contains the standard mortgage clause, the public adjuster should not be included as a payee even if there is an otherwise valid assignment.

Comparative Fault In Food Vendor Negligence

Tennessee courts have long acknowledged the importance of food safety.  See Bissinger v. New Country Buffet, No. M2011-02183-COA-R9CV, 2014 WL 2568413, at *15 (Tenn. Ct. App. June 6, 2014), appeal denied (Oct. 20, 2014).  Vendors producing food intended for consumption are held to the highest standard of care.  Jones v. Mercer Pie Co., 214 S.W.2d 46, 49 (1948).  In Tennessee, when a consumer seeks to hold a food vendor accountable for injuries sustained as a result of the consumption of defective foods, she will usually claim the food vendor was negligent in the preparation of the product.  For a negligence claim to stick, the consumer must show duty, breach, cause-in-fact, loss or injury, and proximate cause. In other words, the consumer must show the food vendor owed a duty of care to the consumer, the vendor’s conduct fell below that standard of care amounting to a breach, and that there was something wrong with the food when it left the vendor’s hands, which, when consumed, caused injury.  The failure of the consumer to show any one of those factors is detrimental to the negligence claim.

Even if a consumer is able to show all of the factors of a negligence claim, the vendor may utilize an affirmative defense in order to negate liability. One such defense would be for the vendor to assert comparative fault against the consumer.  Under comparative fault, the plaintiff’s fault must be less than the defendants’ combined fault.  McIntyre v. Balentine, 833 S.W.2d 52, 57 (Tenn. 1992).  In Brown v. Logan’s Roadhouse, for example, a female plaintiff sued Logan’s Roadhouse for negligence after she bit into and chewed a piece of meatloaf containing a metal fragment, purportedly a metal staple. Logan’s Roadhouse denied any acts of negligence, and asserted fault against the plaintiff for her continuing to chew the meatloaf after discovery of the staple. This argument had some “effect” on the jury because it found the plaintiff to be 40% negligent in causing her own injuries. The general jury award was $27,500, and the court subsequently entered judgment for the plaintiff, less comparative fault, in the sum of $16,500.

New Case: Constructive Notice In Context of Premise Liability

A new case filed June 15, 2015 in the Circuit Court of Appeals of Tennessee at Knoxville found that vomit on the floor of a Hardee’s restaurant for approximately three minutes was a sufficient length of time to charge defendant with constructive notice of the dangerous condition.  The case at issue is styled Kyle Beverly, et al. v. Hardee’s Food Systems, LLC, No. E2014-02155-COA-R3-CV – FILED – June 15, 2015 (Tenn. Ct. App., April 14, 2015).

This appeal followed a successful summary judgment in the trial court, which found there was no evidence to support constructive knowledge on the part of the defendant.  The videotape from Hardee’s showed two employees were busy serving customers during the three minute time period the condition existed before the fall.  The trial court found (correctly in my opinion) the vomit did not existed on the floor long enough that the defendant, using ordinary care, should have discovered and corrected the unsafe condition.

Under Tennessee law, constructive notice is defined as “information or knowledge of a fact imputed by law to a person because he could have discovered the fact by proper diligence, and his situation was such as to cause upon him the duty of inquiring into it.”  See Hawks v. City of West Moreland, 960 S.W.2d 10, 15 (Tenn. 1997).  Plaintiff can prove constructive notice by presenting evidence that the condition existed for a length of time that the owner/occupier in the exercise of reasonable care, should have become aware of the condition.

In reversing the Trial Court below, the Court of Appeals found there was evidence in the record that “could potentially” establish constructive notice and, as a result, summary judgment was inappropriate.  Specifically, the Court found that there were factual considerations that should have been considered, e.g., the nature of the business, the revolving number of patrons, and the nature of the danger, its location, and the foreseeable consequences.  In considering these various factors, the Court found there were sufficient facts from which a reasonable jury could infer the condition existed for such a length of time that one exercising reasonable care would have discovered it.

Not all premise owners will be charged with constructive notice under the same circumstances presented by this case.  The fact that Hardee’s is a fast food restaurant definitely played a role in the Court’s decision as to what would be a reasonable response of an employee.  Nevertheless, this case reminds all premise owners of its responsibility to have periodic inspections.  The frequency of the inspections needs to be tailored to the type of business operation.  If you have questions or concerns regarding whether your business’ policies and procedures are adequate to prevent these types of claims, please do not hesitate to contact us directly.

Mold Claims in Tennessee – Policy Language Proves Important

Many insurance policies exclude damages caused by mold and fungi. Whether or not a loss caused by mold is covered under a policy will have to be made on a case-by-case basis.  The wording of the policy and the specific facts of the loss will control this determination.

Most policies generally provide coverage for direct physical loss and then specifically exclude coverage for mold.  Although the exclusion expressly mentions mold, a court could be persuaded to interpret these exclusions collectively.  In other words, if the mold is the result of an otherwise covered loss, this exclusion may not bar coverage.

Part of the “problem” in Tennessee arises out of the doctrine of “concurrent causation.”  Here, there will be coverage in a situation where a non-excluded cause is a substantial factor in producing the damage or injury, even though an excluded cause may have contributed in some form to the ultimate result and, standing alone, would have properly invoked the exclusion contained in the policy.  Davidson Hotel Company v. St. Paul Fire and Marine Insurance Company, 136 F. Supp. 2d 109 (W.D. Tenn. 2001); Allstate Insurance Company v. Watts, 811 S.W.2d 883 (Tenn. 1991). Thus, damage caused by mold and fungi may still be covered by the policy if the mold is the result of a “covered loss” such as a burst pipe.

As a result, many carriers have changed the language of their mold exclusion to preclude coverage for losses caused by mold or fungi regardless whether said loss was direct, indirect, or concurrent.  The United States District Court for the Eastern District of Tennessee examined such an exclusion in Pennsylvania Nat. Mut. Cas. Ins. Co. v. HVAC, Inc., 679 F. Supp. 2d 863 (E.D. Tenn. 2009).  It held the exclusion explicitly, unambiguously, and clearly excluded coverage for a loss due to mold.  Id. at 874-75.

Some policies provide limited coverage for mold or fungi.  For instance, in State Auto. Mut. Ins. Co. v. R.H.L., Inc., 07-1197, 2010 WL 909073 (W.D. Tenn. Mar. 12, 2010), the Court examined a policy which provided coverage where fungi was “the result of a ‘specified cause of loss’ other than fire or lightning.”  There, the only potentially applicable “specified caused” of loss was “water damage” caused by leaks in or around the property’s laundry room occurring within the policy period.  The insured could not prove “water damage” occurred within the policy period and therefore there was no coverage for the fungi.

Many policies today utilize “anti-concurrent” causation lead in language for certain exclusions to defeat the concurrent causation doctrine.  Such language typically excludes losses caused “directly or indirectly” by the excluded peril and applies whether or not any other cause “contributes concurrently or in any sequence” to cause the loss, making it clear that if the excluded peril contributes, there is no coverage.  The additional coverage for mold can be very specific and can include and limit coverage for a variety of mold related concerns, including mold testing.  Thus, it is important to specifically reference the policy language itself in evaluating coverage for a mold or fungi claim.

Agent and Insurer Liability Post Procurement of Policy in Tennessee

The Court of Appeals recently had an opportunity to revisit the issue of agent negligence when procuring the wrong coverage for an insured.  In Steven Barrick and Janice Barrick v. State Farm Automobile Insurance Company and Thomas Harry Jones No. M2013-01773-COA-R3-CV, (Tenn. Ct. App. 2014), the Barricks initially obtained automobile insurance through State Farm with Thomas Jones as their agent from 1985 until 2009.  Id.  The Barricks’ lawsuit alleged both State Farm and Jones had a duty of care to advise the Barricks of their need for increased coverage after the initial procurement of the policy.

While operating an insured vehicle, Mr. Barrick struck a motorcyclist who died at the scene of the collision.  The motorcyclist’s survivors filed a complaint against him which subsequently settled for $200,000.00.  However, the Barricks’ policy with State Farm had limits of $100,000.00 per person and $300,000.00 per occurrence.  Thus, the Barricks paid $100,000.00 more than their coverage allowed out of their own pocket.  Id.

The Barricks claimed State Farm and Jones were negligent.  A second amended complaint alleged Jones (the agent) was negligent because he had a special relationship with the Barricks where he not only recommended but also selected liability coverage and limits for the Barricks’ policies.  The Barricks claimed this created additional duties beyond those of the ordinary insurance agent.  The Barricks also argued State Farm was vicariously liable for Mr. Jones’ negligence.

The trial court granted summary judgment for the defendants and found both State Farm and Mr. Jones affirmatively negated the element of duty within the Barricks’ claim or that the established element of duty could not be proved at trial.  Further, the trial court specifically found Mr. Jones’ duty to the Barricks ended once he obtained the initial insurance coverage, and owed no further duty to the Barricks to select appropriate coverages or limits thereafter.

This particular case was governed by the summary judgment standard referenced in Hannan, et al v. Alltel Publishing Company, 270 S.W.3d 1, 8 (Tenn. 2008).  Under Hannan, it is not enough for a moving party to challenge another party to “put up or shut up”.  The Barricks alleged Mr. Jones’ assumed duties beyond those of an ordinary insurance agent.  Relying upon Bennett v. Trevecca Nazarene Univ., 216 S.W.3d 293 (Tenn. 2007), the court decided it can apply the principle of assumption of duty to this case.  In other words, if Jones regularly recommended and selected coverage for the Barricks, he had a duty to do so with reasonable care.  The court determined that under the Hannan standard, summary judgment was not appropriate because there could be facts to establish in assumption of duty.  Further, the court determined that State Farm could not be granted summary judgment for the same reasons in that he could still be found vicariously liable for its agent’s acts.

This case reiterates that neither an agent nor the insurance carrier has a duty to the insureds after the initial policy or coverages had been procured.  However, such a duty might exist if the agent continues to select or recommend coverages for the insured after the initial procurement of the policy.  The insurance carrier can be found vicariously liable for an agent’s breach of duty under both situations.

Time Limit Settlement Demands – What is the Insurance Company’s Responsibility?

We are sometimes asked by insurance company representatives about how to respond to a plaintiff’s time limit settlement demand.  There are no direct Tennessee cases on point on this issue, though Tennessee does have certain requirements in considering settlement demands against an insured.  In Tennessee, insurance carriers who have exclusive control over investigation and settlement of a claim may be liable for more than the policy limit when it fails, in bad faith, to settle within policy limits.  Clark v. Hartford Acc. & Indem. Co., 61 Tenn. App. 596, 457 S.W.2d 35 (Ct. App. 1970).  Such a recovery sounds in tort, as opposed to under the contract, and is based upon a theory of the breach of the duty of “good faith and diligence in protecting the interests of the insured.”  Id.  This is also the rule in the vast majority of jurisdictions.   State Auto. Ins. Co. of Columbus, Ohio v. Rowland, 427 S.W.2d 30, 33 (1968).  As one court pointed out, things to be considered include:

the strength of the injured claimant’s case on the issues of liability and damages; attempts by the insurer to induce the insured to contribute to a settlement; failure of the insurer to properly investigate the circumstances so as to ascertain the evidence against the insured; the insurer’s rejection of advice of its own attorney or agent; failure of the insurer to inform the insured of a compromise offer; the amount of financial risk to which each party is exposed in the event of a refusal to settle; the fault of the insured in inducing the insurer’s rejection of the compromise offer by misleading it as to the facts; and any other factors tending to establish or negate bad faith on the part of the insurer. Id.

Other states have examined time limit settlement demands, but in a limited fashion.  A Georgia court explained that “an insurance company does not act in bad faith solely because it fails to accept a settlement offer within the deadline set by the injured person’s attorney” but whether “the insurer acted unreasonably in declining to accept a time-limited settlement offer.”  S. Gen. Ins. Co. v. Wellstar Health Sys., Inc., 726 S.E.2d 488, 491-92 (2012)(emphasis added).  New York courts hold that failure to respond to a time limit demand when the insured’s liability was still under investigation is not enough to establish a case for bad faith.  Pavia v. State Farm Mut. Auto. Ins. Co., 626 N.E.2d 24 (1993).  However, Florida courts hold that failing to “ensure payment of the policy limits within the time demands” is included in the consideration for bad faith.  Berges v. Infinity Ins. Co., 896 So. 2d 665, 672 (Fla. 2004).

Thus, the failure to accept a time limit demand is but one consideration courts allow to be made in examining whether a carrier has acted in bad faith.  Thus, it is important to be actively engaged in investigation, consider all settlement demands, communicate all settlement demands with the insured, and otherwise consider the interests of the insured.  While there appears to be no per se rule about responding to time limited demands, it is in the best interest to respond within the time period, if possible, even if it is to simply let the claimant know the reasons why a response cannot be made within the time constraints of the demand.

Tennessee Court Reaffirms Individual’s Duty to Take Care for His Own Safety

The Tennessee Court of Appeals recently ruled on a curious case of slip-and-fall.  In the case of Petros Goumas v. Jimmy Mayse, et al., the Tennessee Court of Appeals in Knoxville found that the Trial Court correctly granted summary judgments to the defendants.  The plaintiff was the fiancé of the daughter of the defendants, Jimmy Mayse and wife, Barri Mayse.  Goumas was staying with his future in-laws when he slipped on a rock and broke his arm.  It was daylight and dry at the time of the accident.  Goumas had worked on the property before and knew where the rock was located.

Both the trial court and the court of appeals made quick work of dismissing this case on summary judgment.  The court of appeals reiterated that liability in premise liability cases stem from superior knowledge of the condition of the premise.  Under the circumstances of the case, the court found that plaintiff had as much knowledge of the condition of the premise as the owners.  The court also restated two, long-standing principals in Tennessee.  First, an individual has the duty to take care for his or her own safety.  And second, negligence is not to be presumed by the mere happening of an injury or an accident.

Chief Judge Susano’s opinion does not necessarily present a novel legal precedent, but the facts of the case and the affirmation of some long-standing principals favorable to owners of property warrant some comment.  Also, I can’t help but wonder whether Goumas wed the daughter of Jimmy Mayse.  Sources confirm Goumas was forced to sue his future in-laws because the homeowners’ insurer denied coverage for the incident.  So maybe the facts as presented do not tell the whole story.  Rumor is Goumas and fiancé moved away from Tennessee to Elk River, Minnesota.

Riad Decision Sheds Light on Tennessee Statutory Bad-Faith Claims

I recently wrote about a recent Court of Appeals decision on an insurance contract claim concerning several issues that come up in first-party bad faith claims against insurers, including the admissibility of evidence that would ordinarily amount to hearsay and excluded from introduction at trial.  See John Riad v. Erie Insurance Exchange, E2013-00288-COA-R3CV, (Tenn. Ct. App. Oct. 31, 2013).  The Court also examined whether the trial court erred in allowing the jury to consider the plaintiff’s claim for bad faith pursuant to T.C.A. §56-7-105 for failure to give the required 60 day notice.

In order to maintain a statutory bad faith claim against an insurer on a first party claim, T.C.A. §56-7-105 and case law require a formal demand for payment to be made, and that the insured must wait 60 days after making the demand before filing suit.  In Riad, several e-mails were sent from the insurance agent to Erie concerning the plaintiff’s desire to sue both the insurance agency and Erie, including for bad faith, if the claim was not paid.  The Riad court admitted precedence on this issue was conflicting as some cases have held “that a simple form of demand for payment is required, while others provide that an explicit threat of litigation is required.”  Id.  See also Heil v. Evanston Co., 690 F.3d 722, (6th Cir. 2012).  However, the Court of Appeals recognized the plaintiff provided some form of notice to the insurance agent he intended to file a civil suit that would likely raise bad faith claims, and accordingly, the Court of Appeals found that applying either rationale, the plaintiff provided a formal demand as required by statute.  Id.

After the Court found plaintiff could seek the bad-faith penalty, Erie asserted that the Plaintiff’s recovery was limited to the insured loss under the policy’s coverage and the statutory 25% bad-faith penalty.  The Riad Court disagreed and found the bad faith statute could be used as an additional form of recovery for an insured and was not a limitation of recovery. Id.  The Riad Court explained the purpose of assessing damages in breach of contract suit is to place the plaintiff in the same position he would be if the contract had been performed.  Id.  Here, because of Erie’s alleged non-performance of the policy, the insured lost rental income but his policy contained no coverage for lost rents.  Id.  The Court discussed the bad-faith statute and allowed recovery of the loss rents, though it may be argued such damages would be more likely constitute consequential damages as opposed to bad-faith damages.  Id.  An application for appeal to the Tennessee Supreme Court has been filed.